Beltransgaz today has made the first payment for a larger part of the debt to Gazprom for gas deliveries in the first half of 2007.

To that end, the decision was taken to delay a reduction of gas supply to the consumers of the Republic of Belarus. Gazprom is expecting full repayment of the debt within a one week period and timely payments for 100 per cent of the current gas deliveries.

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On December 31, 2006 Gazprom and Beltransgaz signed a Gas Supply & Transit Contract for 2007 through 2011. The Document fixed the price of Russian gas for 2007 (US$ 100 per 1,000 cu m) and the pricing formula starting from January 1, 2008 (which is in line with the Russian gas supply pricing formula for Europe).

Additionally, pursuant to the Contract, the Belarusian side paid 55 per cent of gas supply in the first half of 2007 on the condition of repaying the remaining sum until July 23 and switching to 100 per cent gas supply payments from July 1.

The Contract also fixed the tariff rate for gas supply by the Beltransgaz owned networks (US$ 1.45) and the service charge for the Yamal-Europe gas pipeline operation (calculated under a formula). Gazprom regularly pays for Russian gas transit via the territory of the Republic. Monthly payments are around US$ 30 mln.

On December 31, 2006 Gazprom and the Government of the Republic of Belarus signed a Protocol stipulating that Gazprom would pay US$ 2.5 bln in equal portions for a 50 per cent stake in Beltransgaz within four years.

So, Belarus obtained unprecedentedly beneficial terms and conditions for Russian gas purchases and a time period enabling to adapt to a new price.

The payment deferral during January-June 2007 was US$ 456.16 mln. In violation of the existing Contact the payments were not arranged and their effectuation guarantees were not presented. At the same time, Gazprom timely committed US$ 625 mln to purchase a 12.5 per cent stake in Beltransgaz.